4 Ways Jeff Bezos Stopped Overestimating Risks and Underestimating Opportunities
Written by
Caitlyn Moorhead
Edited by
Rebekah Evans
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Avoiding possible danger seems like a good survival instinct overall as a human. However, as an investor or someone looking to grow their wealth, you may have to loosen the reins on your risk tolerance or at least stop misreading when an opportunity is at your door. If you want a poster child for this, like him or lump him, Jeff Bezos knows how to maximize his earnings.
Just because Bezos often emphasizes long-term market leadership over short-term profitability, it doesn’t mean he doesn’t live by the motto of being bold rather than timid with investments. The mindset is the foundation of a practical approach anyone can apply to careers, money, business and personal goals. Here are four ways to apply it to your everyday life.
Use the Regret Minimization Framework
Decision paralysis is a chronic condition. Sometimes you need a set of parameters to better help you take that first reluctant step forward. When Bezos was deciding whether to leave a secure job to start Amazon, he didn’t obsess over the short-term downside.
“When I’m 80, am I going to regret leaving Wall Street? No. Will I regret missing the beginning of the Internet? Yes,” Bezos asked himself, as quoted by Halbert Hargrove.
As he described it, he wanted to “minimize the number of regrets” and realized he would regret not participating in what he believed would be a major shift far more than he’d regret failure. This motto can apply to the next time you want to make a money move.
It changes the question from “What can I lose?” to “What will I wish I’d done?” That shift reduces the tendency to overestimate near-term risk. So where do you want to be in 10 years?
Adopt ‘Day 1’ Thinking
Bezos often describes Amazon’s mindset as always being “Day 1.” In fact, he warns that “Day 2” is stasis because after that is irrelevance, painful decline and death. This casual summation may sound extreme, but you can’t argue with his results.
If you are looking to start your own business or just work independently, Bezos would tell you that staying in “Day 1” requires customer obsession, adopting external trends and high-velocity decision making. Essentially, take the driver’s seat and instead of over-protecting what you have, focus on what you can do with it next.
Before you slip into “Day 2” mode, beware of false certainty and slow action. Evaluate where you are optimizing process over results and do what works for you, not what’s trending.
One-Way Doors vs. Two-Way Doors
A major reason why you may overestimate risk is that you feel like every single decision you make is permanent. That’s normal, but luckily, not accurate. This is why Bezos pushes against using a one-size-fits-all process and emphasizes that many decisions are reversible “two-way doors.”
That way, if you’re wrong or change your mind, you can often course-correct. Most people mistakenly label too many choices as “one-way,” which creates analysis paralysis — and lost opportunity.
Think Like an Owner: Checklist for the ‘Bezos Way’
Bezos’s operating philosophy focused on long-term value over short-term comfort. Simply put, develop an owner mindset to prevent falling into the two common traps of overestimating risk because you’re overly protecting what you’re used to and underestimating opportunity because you’re discounting long-term compounding potential.
Ask yourself these questions:
- Does this decision increase future options?
- Am I buying short-term relief at the cost of long-term upside?
- If I were advising someone I loved, what would I tell them to do?
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